This paper examines the mechanisms by which democracy clauses promote democracy and domestic political stability. It begins by noting that political instability in one country can have a negative spillover and impede the economic success of regional integration. Domestic political instability may also hinder cooperation among member states. Thus, domestic political stability is a collective good for regional integration organization (RIO) member states. Legalizing democratic conditionality helps member states to overcome collective action problems and equips RIOs with the necessary credibility, justification, and tools for intervention in member states’ domestic political affairs. In addition, RIOs deepen economic integration among member states, which in turn raises the stakes for the member states to collectively defend democratic institutions and inflates the costs of sanctions for countries under threat. We test the main arguments using data gathered for 40 RIOs in the world. The econometric analyses of RIO coup rates and democratic backsliding rates demonstrate that democracy clauses are indeed effective in preventing coups and backsliding within countries that are members of RIOs with such clauses. Moreover, an analysis of democratic gains indicates that democracy clauses are also effective in the promotion of democracy within RIO member states.